What is Bonsai Coin (BONSAICOIN)?

Bonsai Coin, also known as BONSAICOIN, is a meme coin introduced to the Lens Protocol ecosystem by the MadFi team. It has captured attention due to its unique concept of linking fungible tokens with NFTs, and its sharp price movements since launch. 

Yet, beyond the headlines and social media discussions, there remains much to unpack about what Bonsai Coin actually is, how it operates within Lens Protocol, and the cautions one should observe before considering any involvement.

What is Bonsai Coin and How Did It Start?

Bonsai Coin is promoted as the first memecoin on Lens Protocol, developed by MadFi, a team aiming to connect tokens with the creator economy. Officially launched on March 4, Bonsai Coin quickly made headlines due to its soaring price. 

The token saw a 700% increase in just two weeks, recently trading around $0.08, with a fully diluted valuation reportedly reaching $80 million according to Coingecko data. This rapid surge reflects the current appetite for Meme coins across various blockchains.

The project received significant backing in its early stage. MadFi raised $1 million in an angel round led by Palm Tree Crew Crypto, involving other investors like Avara Ventures, Social Graph Ventures, Friends With Benefits, and Polygon’s Sandeep Nailwal. This funding was intended to support the integration of Bonsai Coin within Lens Protocol to facilitate payments, creator rewards, and token-driven interactions.

An unusual aspect of Bonsai Coin is its DN404 structure. Unlike standard ERC-20 tokens, BONSAI is technically a “Divisible NFT.” For every 100,000 BONSAI tokens a user holds in their wallet, they are awarded one Bonsai NFT. 

This concept, though innovative, remains experimental and has not gone through the formal Ethereum Improvement Proposal (EIP) process to become an official ERC standard.

It is important to note that while Bonsai Coin’s rise has been organic within Lens, with creators earning over $240,000 in tokens, its utility beyond this ecosystem remains unclear. Furthermore, the official whitepaper is currently inaccessible, limiting deeper technical review or transparency on its tokenomics and security architecture.

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Bonsai Coin’s Role in Lens Protocol and Its Market Trends

Lens Protocol underwent a significant change in February this year by transitioning from a beta to a permissionless model. This means anyone can now mint a Lens profile and participate in the network’s social features and creator tools. MadFi positioned Bonsai Coin as the memecoin that could become the default currency of this expanding protocol.

Indeed, Bonsai Coin’s integration has been rapid. By March, it overtook wrapped MATIC (wMATIC) as the currency of choice for monetisable content on Lens. Its market share in monetised publications surpassed 75% and peaked at 90% within a week, according to MadFi’s data. 

This adoption reflects both strategic placement and the momentum often seen in new Meme coins with community engagement incentives.

However, it is equally important to observe Bonsai Coin’s price volatility. While it gained over 30% ahead of MadFi’s investment announcement, it subsequently fell by 25% within a 24-hour period. Such swings are not uncommon in meme coin markets, driven heavily by sentiment, rapid speculation, and market makers. BONSAI’s price movements, while impressive, underline its risk profile, especially for those unfamiliar with memecoin trading dynamics.

Another note of caution is its current categorisation. As a DN404 token linked to NFTs, the legal and regulatory classification of Bonsai Coin remains to be clarified. This may affect its integration with centralised exchanges or compliance-based DeFi protocols in the future.

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Considerations Before Engaging with Bonsai Coin

While the narrative around Bonsai Coin focuses on community growth and creator empowerment, users should approach with careful evaluation. The first concern is the lack of a publicly accessible whitepaper. 

A whitepaper typically provides critical insights into a project’s objectives, tokenomics, technical infrastructure, and long-term roadmap. Its absence limits transparency and poses an information asymmetry risk.

Secondly, Bonsai Coin’s experimental DN404 format may not be widely supported across wallets or decentralised applications, potentially restricting its liquidity and usage flexibility. 

Although MadFi presents this structure as innovative by linking fungible tokens to NFTs, it is not yet an officially recognised ERC standard, meaning its interoperability and security assurances remain unverified.

Thirdly, Bonsai Coin’s market success is deeply tied to Lens Protocol’s user growth and the effectiveness of MadFi’s future implementations. Should Lens experience user stagnation or face technical setbacks, Bonsai Coin’s perceived utility could diminish rapidly.

Finally, the rapid price appreciation and equally sharp corrections highlight the speculative nature of BONSAI. Investors or holders should ensure they only allocate funds they can afford to lose. As with any memecoin or early-stage project, risk management and critical research are essential.

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Conclusion

Bonsai Coin represents an ambitious memecoin project aiming to reshape creator payments on Lens Protocol through its unique DN404 divisible NFT structure. Its early adoption, sharp price growth, and significant funding from reputable investors demonstrate strong initial traction. 

However, several concerns remain: the inaccessible whitepaper, its untested token standard, and its reliance on Lens Protocol’s growth trajectory. Anyone considering engagement with BONSAI should exercise caution, conduct thorough research, and be aware that its long-term viability and utility are not yet guaranteed.

FAQ

What is Bonsai Coin used for?

Bonsai Coin is used primarily within Lens Protocol to pay creators and monetise content, aiming to become its default currency.

Is Bonsai Coin a safe investment?

Due to its experimental nature, lack of whitepaper access, and high price volatility, it is considered a high-risk memecoin.

How does Bonsai Coin’s DN404 structure work?

For every 100,000 BONSAI tokens held in a wallet, holders receive one Bonsai NFT, combining fungible token utility with NFT ownership.